Saudia said in a statement emailed to Reuters on Monday that it had concluded the bidding process for its medical unit - Saudi Medical Services. It did not name the bidder, saying the partner would be announced after the completion of required approvals.

Three sources familiar with the transaction said Dr. Soliman Fakeeh Hospital had been selected as a preferred bidder in the deal which is estimated to be worth about 650 million Saudi riyals ($173 million). The sources declined to be named due to commercial sensitivities.

The Saudi government is working on a pipeline of privatisations as part of economic reforms aimed at diversifying the Gulf Arab state’s economy away from oil.

Soliman Fakeeh declined to comment, while the financial adviser for the sales process, Jadwa Investment, was not immediately available to comment.

Sources told Reuters in May last year that the transaction could fetch $500 million.

However, one of the sources said on Monday the airline’s initial price expectations had been high and the deal structure had changed.

The two sides are still negotiating the final terms of the deal, the source added without elaborating.